A characterization of inefficiency in stochastic overlapping generations economies

• 成果类型: Article
• 署名作者: Bloise, Gaetano; Calciano, Filippo L.
• 署名单位: Roma Tre University; Universite Catholique Louvain
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2008.01.002
• 发表日期: 2008
• 页码: 442-468
• 关键词: Stochastic overlapping generations economies; INEFFICIENCY; Competitive prices; Cass Criterion; Social Security; incomplete markets

摘要

In this paper, we provide a characterization of interim inefficiency in stochastic economies of overlapping generations. With respect to the established body of results in the literature, we allow for sequentially incomplete markets and we remove the hypothesis of two-period horizons, by considering longer, though uniformly bounded, horizons for generations. The characterization exploits a suitably Modified Cass Criterion, based entirely on observable prices and independent of the length of the horizons of generations. For sequentially incomplete markets, we introduce a notion of unambiguous inefficiency, separating the inefficient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous inefficiency reduces to inefficiency when markets are sequentially complete. Furthermore, our analysis shows that the hypothesis of two-period horizons is purely heuristic in establishing a criterion for inefficiency. (C) 2008 Elsevier Inc. All rights reserved.